Annual Report 2011 TOYOTA MOTOR CORPORATION
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0808 Rewarded with a smile by exceeding your expectations Annual Report 2011 Year ended March 31, 2011 TOYOTA MOTOR CORPORATION 0729 Leading the way to the future of mobility A future mobility that links people with products and services Toyota's Global Vision not only calls for building better cars, but also expresses our goal of contributing to the creation of better communities. Toyota is developing new products and services for the future of mobility, with the goal of realizing practical, low-carbon mobility; new lifestyles; broad application of environmental technologies and infrastructure for safer mobility. Fruit Fruit Ever-better cars Enriching lives of communities Develop vehicles that Contribute to communities exceed expectations Contribute to the future of mobility Sustainable growth Constantly strive for the "ever-better cars" and "enriching lives of communities" goals by ensuring sustainable profitability with a long-term point of view. Trunk Stable business base Roots Toyota values The Toyoda Precepts Guiding Principles at Toyota The Toyota Way Tomorrow's environment-friendly vehicles, new business activities 2 0729 Meeting challenging goals by engaging talents and passion Building cars that meet the needs of people in every region Toyota seeks to build ever-better cars that Percentage of Sales by Market meet the needs of consumers and society, based on our principles of “customer- first,” “genchi genbutsu” (onsite, hands- Emerging 2010 Industrialized Emerging 2015 Industrialized markets Sales nations markets Sales nations on experience) and “good quality, 40% performance 60% 50% plan 50% affordable price.” We seek to realize this goal by cultivating global personnel who maintain the spirit of Toyota’s culture of Achieve equal weightings in unit sales between industrialized nations and emerging markets craftsmanship (monozukuri ) and skill proficiency. Manufacturing and Sales Strategies 3 0819 Constantly innovating to create new value Exceeding expectations and making an impression We aim to work as hard as we can to exceed expectations. To that end, we seek not only to incorporate leading- edge technologies, but also to create new value in vehicles in such areas as design, high-tech communications and quality, so that people can see, touch and feel that value when using our products. Our goal is to build cars that impress by being one step ahead in innovation. Product Development Strategies 4 0819 Moving people in the safest and most responsible ways Unending pursuit of integrated safety Toyota takes an integrated approach combining safe vehicle development, traffic-safety awareness and the creation of a safe traffic environment based on our guiding principle of always providing safe products, so that riding in our vehicles will bring smiles . By offering safety and quality that exceed expectations, we are contributing to achieving the goal of next-generation mobility: zero traffic fatalities. Three-Pronged Integrated Approach People Traffic Vehicles Environment Special feature: Toyota’s Safety Technology 5 0810 Contents Toyota Digest: The Way Forward 2011 Highlights Message / Vision Message from the President 7 Chairman’s Message The President thanks our customers for support during a challenging environment, announcing our Global Vision efforts and our 8 President’s Message aim to be “A Company Selected By Customers.” Human life is our top priority, so relief and regional recovery came first in the 9 TOYOTA Global Vision aftermath of the earthquake. Next, we set about restarting production, deploying the awesome power of superior “on-the-spot” efforts for rapid production normalization. We are holding our course toward sustained growth amidst challenging circumstances. Special Feature: Toyota’s Safety Technology Toyota Global Vision Business and Performance Review Our new vision clarifies the kind of company Toyota seeks to be and our course for realizing a “regional initiative” structure for 18 Consolidated Performance Highlights sustained growth. We aim for coexistence and co-prosperity with customers and society by building better cars and creating good 20 Automotive Operations communities and a good society, providing earnings for a stable business/earnings foundation (consolidated operating margin 5% 21 Restore and Renew Our Production Structure for Further Growth on unit sales of 7.5 million, ¥85/US$1 (operating income approx. ¥1 trillion) and nonconsolidated operating income profitability). 22 Financial Services Operations 23 Other Business Operations Special Feature: Toyota’s Safety Technology 25 New Business Activities Toyota seeks to offer products that exceed customer expectations for safety and quality, and is working to contribute 26 Support for Recovery from the Great East Japan Earthquake to achieving zero traffic injuries and fatalities, which is the ultimate goal of the mobility society. We introduce the three perspectives we take in striving to provide the world’s highest level of safety: Our basic safe philosophy, the leading-edge Management and Corporate Information technologies we employ to achieve safer vehicles, and future direction of safety technologies. 27 R&D and Intellectual Property 29 Corporate Philosophy New Business: Toyota’s Smart Grid Efforts 30 Management Team Realizing the “future mobility society” conceived in our new vision requires the broad acceptance of next-generation 32 Corporate Governance environmentally-friendly vehicles. We introduce the smart grids that will provide the infrastructure to make this possible, giving 35 Risk Factors an outline of the overall concept and discussing the trials that will lead to their realization and ties with other companies, such 38 Other Management and Corporate Data as Microsoft, that will speed up the process. Financial Section and Investor Information New Management Structure 39 Message from the Executive Vice President Responsible for Accounting We revamped our management structure on April 1, 2011, so as to achieve our new vision. We introduce structures for 41 Selected Financial Summary (U.S. GAAP) making prompt management decisions based on onsite information and customer opinions and creating a structure for 43 Consolidated Segment Information management that is closely attuned to what is happening at actual sites. 44 Consolidated Quarterly Financial Summary 45 Management’s Discussion and Analysis of Financial Condition and Results of Operations Outline of Results and Future Prospects: Message from the Executive Vice President Responsible for Accounting 70 Consolidated Financial Statements During the fiscal 2011 we bounced back from challenging circumstances to produce results showing improved earnings 75 Notes to Consolidated Financial Statements and profits. We will continue toward the goal set forth in our Global Vision of building consistent, solid profitability in 110 Management’s Annual Report on Internal Control over Financial Reporting nonconsolidated operating income, with a consolidated operating margin of 5% and operating income of around ¥1 trillion, 111 Report of Independent Registered Public Accounting Firm even under such severe conditions as an exchange rate of ¥85/US$1 and consolidated unit sales of 7.5 million. 112 Investor Information Click any title to link to that section Cautionary Statement with Respect to Forward-Looking Statements Toyota operates that affect Toyota’s automotive operations, particularly laws, regulations and government policies relating to vehicle safety including remedial measures such as recalls, trade, environmental protection, vehicle emissions and vehicle fuel economy, as well as changes in laws, regulations and government policies that affect Toyota’s This document contains forward-looking statements that reflect Toyota’s plans and expectations. These forward-looking statements are not guarantees of future performance other operations, including the outcome of current and future litigation and other legal proceedings government proceedings and investigations; (vi) political instability in the and involve known and unknown risks, uncertainties and other factors that may cause Toyota’s actual results, performance, achievements or financial position to be materially markets in which Toyota operates; (vii) Toyota’s ability to timely develop and achieve market acceptance of new products that meet customer demand; (viii) any damage to different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) Toyota’s brand image; and (ix) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment changes in economic conditions and market demand affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe, Asia and other of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed markets in which Toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the Euro, the or sold; and (x) the impact of the March 11, 2011 Great East Japan Earthquake and ensuing events, including the negative effect on Toyota’s vehicle production and sales. Australian dollar, the Canadian dollar and the British pound; (iii) changes in funding environment in financial markets; (iv) Toyota’s